The National Bank of Ethiopia (NBE) has set aside 100 billion birr (952 million dollars) to back loans aimed at attracting more remittances from the diaspora community, central bank Governor Mamo Mihretu announced today.
Speaking at the launch of a new remittance promotion campaign called "Debo" at the Skylight Hotel in Addis Ababa, Mamo said the loan program will provide financing to Ethiopians living abroad who want to invest in real estate and business opportunities back home. The funds will be disbursed through the country's 31 commercial banks.
"There is no reason for the diaspora to use informal money transfer channels anymore. Our banks offer better exchange rates than the black market and transactions are faster and safer through official remittance systems," Mamo said.
Remittances are a vital source of foreign currency for Ethiopia. However, flows have been depressed in part due to a large spread between the official exchange rate and black market rates. Mihretu said the gap has narrowed to four from over 100 percent due to recent foreign exchange reforms that saw floating of the local currency. The birr has depreciated by almost 100 percent ever since.
The central bank also developed an app called unite.et that will allow Ethiopians living abroad to remotely open foreign currency accounts. Regulations to allow remittances through licensed money transfer agencies are also expected within the next two weeks.
The measures are part of the NBE's efforts to strengthen the role of remittances in Ethiopia's economy and alleviate a chronic dollar shortage. Remittance inflows ranged between 5-7 billion dollars.